Clearing refers to the settlement of trades in stock markets. It is the process of reconciling the orders and settling them through dedicated clearing houses that are charged with due settlement process as per SEBI guidelines.
Clearing houses are obligated to record all transactions and ensure the transfer of funds to the correct parties of the transaction along with the final delivery of the security to the end buyer. Clearing houses charge fees for their services as intermediaries which is included in the commission paid to the broker.
